Exposed: Who Created Path Lab Condo Scheme

Urologists in Florida and Texas are progenitors and promoters of this ploy

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CEO SUMMARY: It wasn’t pathologists and it wasn’t laboratory executives who started this scheme. Anatomic pathology condominium laboratory complexes were conceived by urologists in Florida. Some Texas urologists jumped on the bandwagon early, becoming enthusiastic promoters of the scheme to other specialist physicians. That’s why Florida and Texas are the hotbed states for this movement.

BECAUSE ORGANIZERS of pathology condominium laboratory complexes go to unusual lengths to keep their businesses hidden from public view, few people know much about them.

THE DARK REPORT, with this intelligence briefing, begins the process of exposing their business scheme to public scrutiny. The fact that these companies work hard to keep the details of their business secret is a contradiction to the principle that physicians, patients, health insurers, and government health programs should operate in a transparent manner.

Tough Detective Work

The information which follows was collected from a wide range of sources, both public and private. The general story about how the business scheme of a pathology condominium laboratory was cooked up, who contributed, and how it was expanded is believed to be reasonably complete.

However, some of the details presented here may not be completely accurate. This is because much of the information known about pathology lab condo complexes comes from individuals not employed within these businesses.

In particular, it must be emphasized that every attempt to speak with any employee connected with a pathology lab condominium or anyone affiliated with a urology or gastroenterology group that owns an AP lab condo was met with a universal response: “Who are you? We have nothing to say.” In today’s world of instant communications and Internet access to company Web sites, this absolute Wall of Silence is extraordinary.

THE DARK REPORT believes the story of the pathology condominium laboratory complex scheme begins in Ocala, Florida. Two urologists at the Urology Center of Florida, D. Russell Locke, M.D. and Ira W. Klimberg, M.D. can probably be credited as the individuals who conceptualized the business potential of selling anatomic pathology (AP) condominium laboratories to other urology and specialist physician groups.

In April 1996, Locke and Klimberg formed a pathology laboratory company called CytoCor, Inc. (aka CytoCor Diagnostic Laboratory Services). It performed anatomic pathology testing for Urology Center of Florida on specimens generated by the patients of Locke and Klimberg. CytoCor still operates and provides technical services for at least two subsequent pathology lab con- dominium complexes now in operation.

In the years following 1996, CytoCor began providing services to other specialist groups. This experience, combined with certain new regulatory opinions affecting physician group ownership of ancillary services, led Locke and Klimberg to create the concept of the AP laboratory condominium complex. The individual lab condos would be sold to any interested specialist groups.

In January 2002, Locke and Klimberg formed Trover, Inc. as the vehicle to sell the AP laboratory condominium concept to other urology groups. Trover changed its name in August 2002 to Physicians RightPath, LLC. It has the only Web site operated by an AP lab condominium operator, at www.physiciansrightpath.com.

Two Lab Condo Complexes

Physicians RightPath operates an AP laboratory condo complex in Ocala that, at one time, contained as many as six individual laboratories. It built an AP condominium complex in Tampa, Florida. As many as six AP lab condos may be in operation at the Tampa site.

In 2001, the pathologist and the practice administrator left Locke and Klimburg’s employ. Both took positions at Atlantic Urologic Associates (AUA), located in Daytona Beach. The pathologist is Nicholas A. Maruniak, M.D., who still works in enterprises related to AUA. The practice administrator is Chris Hill.

In combination with urologists at AUA, Maruniak and a group of Texas urologists from Urology Associates of North Texas (located in Dallas) started their own company to promote and operate pathology laboratory condo complexes in February 2002. It took the name UroPath, LLC in June 2003.

During the second half of 2003, UroPath began to actively solicit urology and gastroenterology group practices in a number of states.

This AP lab condo complex was located in Leesburg, Florida. It managed anatomic pathology lab condos for specialist group owners located in Texas and several other states. Maruniak was the pathologist for the AP lab condos in that complex.

Based on information gathered from a variety of sources, it appears the Texas urologists took the AP laboratory condominium complex idea to a higher level. They decided they could package and sell AP lab condos to specialist physicians across the United States. UroPath LLC was the business vehicle to accomplish that goal.

During the second half of 2003, UroPath began to actively solicit urology and gastroenterology group practices in a number of states. UroPath would provide a turnkey development and operating solution for any group of specialist physicians wanting to profit from anatomic pathology services generated by their patients.

In addition to the Dallas urologists, another physician group in Texas caught “AP pathology condo lab fever.” Urology San Antonio purchased an AP laboratory condominium in Florida. The medical director was Maruniak.

The financial performance of their AP lab condo was spectacular enough for Urology San Antonio to build an entire AP lab condo complex in San Antonio. It is located in a building they purchased next to their main urology clinic. The laboratory is operated by UroPath, LLC and has at least eight separate lab condominiums in operation. (Read about THE DARK REPORT’S site visit to this AP lab condo complex in July here.)

One enthusiastic booster of urologists capturing anatomic pathology work generated by their patients is Juan A. Reyna, M.D., a partner at Urology San Antonio. UroPath sells this concept by having participating urologists, like Reyna, do sidebar presentations at national and regional urology meetings. The sales process is done urologist-to-urologist, with virtually no marketing materials provided to prospects.

In addition to the San Antonio facility, UroPath is currently building another AP lab condominium complex in Dallas. UroPath’s corporate office is also in Dallas and its President is Ken Flowers.

UroPath Becomes UniPath

For a four-month period, from December 2003 through March 2004, UroPath operated under the name UniPath, LLC. This name was considered to be more inclusive for gastroenterologists and other types of specialist physicians. But conflicts with an existing UniPath corporate registration in Texas and another UniPath in Colorado caused the company to return to its UroPath, LLC name.

The success enjoyed by Physicians RightPath and UroPath in selling between 25 and 50 AP laboratory condominiums did not go unnoticed by others. Another company now selling AP laboratory condominiums is Gulf Coast Medical, Inc., located in Clearwater, Florida area. It is now building a clinical laboratory facility. It may launch its AP condo lab complex with two lab condos, one owned by a dermatology group practice.

The President of Gulf Coast Medical is Morris Behar. He’s been active in the laboratory industry in Florida for a number of years and was formerly with Med Tech Labs, Inc., which was acquired and renamed VitalLabs, Inc. in 2002. (See TDR, July 15, 2002.) VitalLabs has since gone out of business.

Lab Condo Complex Sites

THE DARK REPORT has seen a list circulated by UroPath, LLC in which it states it is operating or building AP lab condo complexes in the following cities: Leesburg, Florida (10 labs), Sarasota, Florida (10 labs), San Antonio, Texas (12 labs), and Dallas, Texas (15 labs). These numbers could reflect commitments to buy, could be marketing hype, or a combination of both. Collectively, these numbers total 47 individual labs. If accurate, that would be a remarkable number for a company operating only 30 months.

The sales campaign by these companies has attracted the attention of specialist groups in many states. In Kansas City, Missouri, a urology group and a gastroenterology group each acknowledges ownership of a “stall-in-a-barn AP lab” in Florida (as characterized by a physician in one of these groups). Specialist groups in states like Indiana and South Carolina are known to be considering buying an AP lab condo.

On the following two pages, THE DARK REPORT presents a family tree and timeline showing development of the AP laboratory condominium complex scheme. Compiled from many sources, this information is believed to provide a reasonably accurate picture, although some specifics may be inaccurate.

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